NATGAS gains almost 3% as traders expect strong US heating wave 📈

Today, natural gas (NATGAS) contracts gained nearly 3% driven by a change in expected weather in the United States, with synoptics suggesting the likelihood of hot weather, increasing demand for air conditioning and thus also the use of gas in power generation.

• Since the minima, at the end of March, contracts have already more than doubled, and now the bulls have taken over, encouraged to secure supplies at higher levels, given the chances of a hot summer. As a result, gas is trading above $3 / MMBtu (million British thermal units).
• The declines of yesterday's afternoon session were quickly erased, with the sell-off prompted by comments from the company responsible for the strategic US Mountain Valley Pipeline; the operator conveyed that the 503-mile pipeline is ready to transport gas to market from West Virginia, which has huge gas deposits. The rapid return to growth suggests that traders still see the weather as more important, suggesting a more balanced supply and demand ratio than the market had previously priced in.

Looking at updated forecasts for the United States, one can see that the overnight forecast (June 9 to 10) is clearly shifting toward an intense heat wave in the central and eastern US states. Source: Bloomberg Finance L.P.

The difference in the hot weather forecast for the U.S. is even more evident with the change in forecast from June 6 (left) and June 10 (right). Source: Bloomberg Finance L.P.

NATGAS (H1 interval)
Source: xStation5